You're talking like the only solutions to this can come from the market, and if the market forces won't work that way then we're screwed and must give up.
The real solution to this is customer/employee friendly regulation. I'm thinking something like a rule requiring an easy, timely way to appeal to a human that's empowered to override the automation after any adverse ruling by it; backed up by the threat of fines and legal sanctions. In the current American federal political climate, that's a stretch, but there are other jurisdictions, at the state level and internationally, where something regulation like this might be feasible.
That said, I've worked for a b2c website. The internet is jam packed with scammers. I'd bet it's an order of magnitude worse on sites like upwork where real money changes hands. At least in our case, if we'd had these types of regulations, we would have terminated service to a list of countries that produced little revenue and high hassle.